Fashioning Innovation via Conversation

Rick Wartzman

September 23, 2011, 3:00 PM EDT

Peter Drucker once thanked his wife, Doris, for providing “whatever clarity and consistency” could be found in his writing. Truth be told, her good advice stretched beyond the editorial to the sartorial. “Peter,” she was known to tell him, “your tie and jacket don’t match. Go change.”

Although he was no dandy, Drucker would have been impressed by the person picked last week to run Louis Vuitton, the famed French designer. Parent company LVMH will replace longtime Chief Executive Officer Yves Carcelle with Jordi Constans, formerly a top executive at Groupe Danone, the yogurt company.

The leap from food to fashion is big enough that Constans will work side by side with Carcelle through 2012 so that he can learn the business before taking over. But already, Constans has articulated a management philosophy that Drucker would have considered a winner, no matter what line someone is in.

At Danone, Constans made clear that he prizes employees who display “openness, rapidity, and agility.” And in a speech last April at IESE Business School, his alma mater, he called for “a more entrepreneurial mindset” to help vanquish the world’s economic woes.

“Innovation comes from conversations,” Constans added, when describing what it takes to build a company culture that can consistently deliver fresh ideas. “You never forget a good conversation.”

Fostering discourse among colleagues is, in fact, an often-overlooked aspect of what Drucker defined as “the task of giving human and material resources new and greater wealth-producing capacity.”

To Innovate, First Connect

As A.G. Lafley and Ram Charan explain in their book, The Game-Changer: “Innovation is a social process. And this process can only happen when people do that simple, profound thing—connect to share problems, opportunities, and learning.”

Of course, not all conversations are created equal. A survey a few years ago by Salary.com found that a third of employees say they waste time by socializing with co-workers. Major corporate breakthroughs tend not to materialize around the water cooler.

What Drucker had in mind is a more purposeful dialogue, driven by management toward uncovering opportunities.

At a typical monthly operational review at most companies, Drucker noted in his 1985 book, Innovation and Entrepreneurship, the conversation is confined to areas in which results have fallen short. “By the time the meeting adjourns for lunch,” he wrote, “the whole morning has been taken up with the discussion of those problems.”

Certainly, Drucker acknowledged, “problems have to be paid attention to, taken seriously, and addressed.” But a truly entrepreneurial company, he said, spends time not only assessing its misses, but also analyzing its unexpected successes. It might, for example, see sales growing in a segment of the market for which a given product wasn’t originally intended. This represents a chance to innovate further and secure even greater gains.

Drucker also suggested holding management meetings twice a year to highlight innovations that the company has seen flower during the preceding period. The purpose isn’t to celebrate the past. It’s to look to the future by asking some pointed questions: How did we find these opportunities? What have we learned that might be replicated? What did these innovators within the company do that the rest of us aren’t doing? And what aren’t they doing that the rest of us are?

Foster “Greed for New Things”

In the end, Drucker warned, all these conversations may not yield specific ideas. Instead, he wrote, “the most valuable achievement may well be entrepreneurial vision, receptivity to innovation, and ‘greed for new things’ throughout the entire organization.”

As a third step, Drucker recommended that a top manager hold a session—”informal but scheduled and well prepared”—with junior people from across the enterprise. “I’m not here to make a speech or to tell you anything,” the senior manager should say, according to Drucker. “I’m here to listen. I want to hear from you what your aspirations are, but above all, where you see opportunities for this company and where you see threats. And what are your ideas for us to try to do new things, develop new products, design new ways of reaching the market?”

This last tactic echoes an approach that Drucker first advocated in his 1967 book, The Effective Executive. “Wherever knowledge workers perform well in large organizations,” Drucker observed, “senior executives take time out, on a regular schedule, to sit down with them, sometimes all the way down to green juniors, and ask: ‘What should we at the head of this organization know about your work? . . . Where do you see opportunities we do not exploit? Where do you see dangers to which we are still blind?’”

Without this “leisurely exchange,” as Drucker called it, “the knowledge people either lose enthusiasm and become time-servers, or they direct their energies toward their specialty and away from the opportunities and needs” of the organization as a whole.

Yet by stimulating such conversations, most any company—whether its business is fancy leather purses, like Louis Vuitton’s, or something else entirely—will find that innovation is in the bag.

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